Barry Dawes, Head of Resources, Paradigm Securities - Capital Raising for Small Cap Resources...

www.paradigmsecurities.com.au

Barry DawesB Sc FAusIMM(CP) MSEG

Head of Resources

Paradigm Securities

Capital Raising for Juniors

The Paradigm Shift

7th Annual Mining NSW Conference

Orange 26-27 June 2013


DisclaimerNothing in this presentation shall be construed as a solicitation to buy or sell any

security or product, or to engage in or refrain from engaging in any transaction. Inpreparing this research, Paradigm did not take into account the investmentobjectives, financial situation and particular needs of the reader.

Before making an investment decision on the basis of this presentation, the readerneeds to consider, with or without the assistance of an adviser, whether the adviceis appropriate in light of their particular investment needs, objectives and financialcircumstances.

This presentation is based on information obtained from sources believed to be reliablebut Paradigm does not make any representation or warranty that it is accurate,complete or up to date. Paradigm accepts no obligation to correct or update theinformation or opinions in it. Opinions expressed are subject to change withoutnotice and accurately reflect the views of Paradigm at the time of writing.

This presentation has originated from Paradigm (ABN 159 611 060), an AuthorisedRepresentative of licensed securities dealer Aureus Capital Pty Ltd (AFS Licence 307706). Paradigm can gain income through brokerage, capital raising commissions andcorporate advisory fees.


The Paradigm Shift

•Knowledge

•Experience

•Vision


What is different this time?

• Global equity markets at all time highs...

• Commodity prices fair.....

• Resources equities trashed !

How now to respond to the current market-The Paradigm Shift!


Consider the impact of Google


Sir John Templeton

• Bull markets..

–Born in Pessimism..

–Grow on Scepticism..

–Mature on Optimism.. and..

–Die in Euphoria

Where are we now?


Market Wave Psychology


Market Wave Psychology

• Wave 1 Disbelief ..

– Little interest..false dawn.. value unappreciated

• Wave 2 Pessimism

• - Told you so...end of the world

• Wave 3 Optimism

– Increased participation.....climbing wall of worry

• Wave 4 Opportunity

– Market values known...soft markets say buy the dip

• Wave 5 Euphoria

– Taxi driver tips and wacky market action...overleverage


Market Wave - Commodities

We are here


Market Wave – All Ords


Market Wave - Oil


Market Wave – Exxon Mobil


Market Wave - Copper


Market Wave – Industrial Metals Index


Long term commodity prices


Market Wave - Commodities

We are here


Non-OECD surpassing OECD

Source: Stockcharts


China surpassing USA

Source: Stockcharts


China surpassing the World!

Source: Stockcharts


China surpassing USA Steel

Source: World Steel Association


So what’s gone wrong?

• US economy recovery steady

• China long term growth strong

• Asian regional growth strong

• European outlook recovering slowly

• Non-OECD resource demand > OECD

• Vast liquidity injections provided

• Gold demand very robust

• Interest rate cycle at bottom

So it should be all good


ASX Metals and Mining


ASX Small Resources


ASX Gold Index


ASX Capital Raising

Source: ASX


Daily ActionASX XGD Gold Index XGD 75% below April 2011


Daily ActionASX XSR Small Resources Index XSR 70% below April 2011


Long Term RelativesXAU vs Gold XAU vs SP 500


ASX Metals and MiningMarket stats


ASX Small Resources


What to do about it

The Paradigm Shift


Sourcing Funds• Why has the market place deserted us?

• Distortions of compulsory super funds

• A$1400bn in funds with A$75bnpa inflow

• APRA funds A$917bn

• Self Managed funds A$441bn

• How many local fund managers available?

• How many local brokers resources savvy?

• How to make the Paradigm Shift


Australian Deployment of Capital A$bn


Australia’s A$1400bn Superfunds


APRA Fund Default Assets (June 2012)

Source: Stockcharts


The Paradigm Shift

• See the importance of direct marketing

• Seek a different market place

• Understand the power of the internet

• Seek out the cash rich SMSFs

• Get in front decision makers globally

• Marketing and capital raising intertwined

• Use of ASX onmarket book build


The Paradigm Shift

• Plethora of web based productivity tools

• Search Engine Optimisation (SEO)

• YouTube Video news propagation

• Twitter news flow engines

• iTunes podcasts

• Interactive blogs


Social Media

Source: Coe Communications


The Paradigm Shift

• Social media initial embrace from youth

• >50s slow to adopt but now growing fast

• Resources investors mostly >60s

• Youth has no money but >50s does

• Realign targets to new demographics

• Sidestep gatekeepers at brokers/media

• Interact with new and current investors

• Spread your unique selling proposition(USP)


The Paradigm Shift• Professional investors and brokers

-52% read company blogs 30% use Twitter -24% blog input helped 12% Twitter helped

• Retail investors and trustees

- 66% of SMSF >50 66% of new SMSF<50

- 51% >50s use SM 70% of 30-49s

• Listed companies globally adopt SM

- 88% Linked-in 63% Twitter 44% Slideshare

- 40% Facebook 29% YouTube



Evolving Demographics

Source: Pew Research



020000400006000080000

100000120000140000160000180000200000

Rio Tinto Iron Road

$188bn(ASX

+ LSE)

$24m

Market cap ($m)

Levelling the playing field

Sources: ASX, TwitterSource: Coe Communications


0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Rio Tinto Iron Road

0.1

123.0

Followers/$m of market cap

Levelling the playing field

Sources: ASX, TwitterSource: Coe Communications


Conclusions• Be among the first to improve your market rating

• You are your internet image

• You don’t know your ideal support base at present

• Engage your market and make them your shareholders

• It will cost money but value will be enhanced

• Higher values mean lower cost of equity

• Capture and harvest your share of A$1484bn bank cash

• Bring in the world

• Get aboard The Paradigm Shift ...because...

The `Optimism’ leg is underway!


Wave Market Psychology


A$ vs US$ 1913 - 2013

Source: Thechartstore.com


A$ vs US Gold Index (XAU) Month end

Source: IRESS data


The Paradigm Shift

• Barry Dawes

• [email protected]

• +61 2 9222 9111

Barry Dawes, Head of Resources, Paradigm Securities - Capital Raising for Small Cap Resources...

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